Ethiopian firms obliged to buy cash register machine

Posted on July 24, 2010

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These days, Ethiopian entrepreneurs are rushing to state-selected suppliers to buy an obligatory cash register. The final deadline for purchasing one hasn’t been announced. But not having one means you are putting your business licence at risk, or you may even be charged with tax fraud.

“It doesn’t make any sense,” says Kebede Mekiria, owner of a small consultancy firm. “We have about five assignments a year and now they want us to put this machine in our office and print a receipt every day. It is ridiculous!”

The frustration among entrepreneurs is the result of a law that requires tax-paying firms with a plc licence to own a sales register machine. The Ethiopian government requires all businesses to record their sales of goods or services and value added tax on a daily basis and keep the printed receipts, irrespective of actual transactions made that day.

“The funniest part is that the suppliers themselves hand out hard copies as receipts. The government expects us to follow their rules, but doesn’t even bother to set an example,” says Mr Mekiria.

Zero birr
The first round of obligatory purchases started at the beginning of 2008 and affected all hotels, bars and restaurants – businesses where having a till actually makes sense. This sixth and final round concerns companies varying from large construction firms to small consultancy bureaus and travel agencies.

It leads to somewhat bizarre scenes of, for example, construction workers printing a receipt after a hard day’s work on a long-term project, stating that they made no money. “It’s the same for us as a small consultancy firm,” says Mr Mekiria. “When we don’t have any assignments, we will bring a box of thirty receipts with a value of zero Ethiopian birr to the tax office at the end of the month.”

Tax authorities claim the new system allows them to be more accurate in their tax estimates, something that entrepreneurs used to complain about in the past. They also say it is a way to trace money laundering and tax evasion.

Monopolists
In the meantime, suppliers are doing good business, selling up to 40 cash registers a day at prices of 290 to 450 euro each, depending on the type of machine. It will also keep them occupied in subsequent years, since they are solely accredited to install the machines, provide the software and give training.

This accounts for maintenance work, too, and even for moving the till, which is officially not permitted without their assistance. The actual delivery of the cash register can take up to several months. Mr Mekiria: “I have been called in for a special training session on 11 September, the Ethiopian New Years Eve. But I am not sure if I will get the actual cash register that day.”

This article was published on RNW.nl/Africa (photo: Flicker/quleed)

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